AMERICANS are receiving a mysterious non-IRS deposit – and there are two ways to stop the fees disappearing from your tax refund.
As the complicated tax season continues for millions of citizens, you can save on the frustrations and keep a better track of your cash.
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The main reason you might see these unknown fees is if you use third-party tax software to handle the process for you.
The Santa Barbara Tax Products Group (SBTPG) acts as middle-man if you choose to pay for third party tax services by taking from their refund.
This way there’s no upfront cost, per Newsweek.
This is why some Americans aren’t receiving their refunds from the IRS directly.
The IRS send the taxpayer’s money to the SBTPG, who then deducts the necessary cost of filing, and sends the rest onto the individual.
There are positives and negatives to using this system.
Finance expert Michael Ryan said: “That’s why you might see a deposit from a company you don’t recognize instead of the IRS.
“Which, let’s be honest, feels super convenient in the moment.
“But you’re basically letting a middleman handle your money first.
“That middleman is usually TPG [Santa Barbara Tax Products Group].”
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: “When you use certain services through tax software companies like TurboTax, you have to pay additional fees, and instead of paying those costs on the front end, taxpayers may opt to have them deducted from their refund amount.
“That decision will also result in a third-party payment service handing your refund, as they receive the refund first, take fees you owe out, then send the remaining amount to your banking account.”
HOW TO AVOID LOWER REFUNDS
Set up in 1991, SBTPG is a subsidiary of Green Dot Corporation, and offers financial products tailored to taxpayers.
If you use the website, your refund will come in lower than you expected, because they have taken out their charge from that amount.
Refunds are disbursed through direct deposit, prepaid Visa cards or cashier’s checks.
Deposits reach bank accounts within one to two business days after SBTPG receives the funds from the IRS.
To avoid this lower refund, you can do two main things.
You can avoid using SBTPG completely, so they aren’t handling your refund, or pay your own tax preparation fees when filing.
Who is eligible for the Middle Class Tax Refund
California residents had to meet certain criteria in order to qualify for the payments.
- Filed 2020 tax return by October 15, 2021
- Met the California adjusted gross income limits
- Were not eligible to be claimed as a dependent in the 2020 tax year
- Were a California resident for six months or more of the 2020 tax year
- Were a California resident on the date the payment was issued
Using SBTPG can put more pressure on the taxpayer to know how much their deducted refund should be.
But it does mean that you should receive your refund quicker.
Beene added: “If you want to avoid this, you can either choose not to use these software providers or—perhaps the better option—pay your tax preparation fees when filing.
“So you have an exact amount you know you’ll be refunded without worrying about additional deductions.”
To track your refund, you can use the online tool Where’s My Refund?.
The US Sun reports that this allows you to check the status of your income tax refund within 24 hours of e-filing and generally within four weeks of filing a paper return.
The deadline for Americas to file their tax returns is April 15, and an extension until October 25 can be requested.
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